Shares of Warner Music Group
Don't be surprised. Only those who aren't paying attention should be shocked by Warner's downward spiral. Revenue tumbled further than expected, 14% to $789 million during the record label's holiday quarter. The music marketer's loss widened during the charge-laden period. Deficits are as common as groupies backstage. Warner has now delivered nine consecutive quarters of red ink on the bottom line.
There was a time when the labels clung to hopes that downloads would save the day, but that's just not happening. Digital sales climbed less than 2% over the past year, certainly not enough to offset the continuing fade in CD sales. The more problematic metric here is that digital revenue has now taken a sequential hit for three consecutive quarters. In other words, buckle up for downloads to begin clocking in with year-over-year declines starting next quarter if the trend continues.
Spoiler alert: It will.
Warner isn't in very good shape right now. Citigroup
The launch of Apple's
However, the same tools to cash in on digital distribution are also now the same weapons being used by unsigned artists to gain audiences without the need for restrictive label deals.
Did you catch the Simon Cowell ad during the Super Bowl? News Corp.'s
The music industry is changing. Live Nation
On the current path that Warner's on it doesn't appear to be warming up to the survivors.
How would you save WMG? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz once had his band signed to Sony's Columbia Records label. It didn't exactly pan out. He does not own shares in any of the stocks in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.